Restricted Stock Purchase Agreement Template

In plain language: Identifies the company and the purchaser as legal parties, records the number of shares sold, the price per share, the total purchase price, and the date of issuance.

Common mistake: Setting a purchase price of $0.00 without filing an 83(b) election. A zero-price grant is taxable as ordinary income on each future vesting date at the then-current FMV — the 83(b) election eliminates this exposure when filed within 30 days.

In plain language: States the total vesting period, the cliff date on which the first tranche vests, and the subsequent monthly or quarterly release schedule for the remaining shares.

Common mistake: Using a vesting start date that is months after the grant date without adjusting the share count. Investors expect a 4-year total vesting period from the date of grant; a shifted start date can leave founders with less-than-standard vesting credit at a Series A.

In plain language: Grants the company the right — but not the obligation — to repurchase unvested shares at the original purchase price if the purchaser's service relationship terminates for any reason.

Common mistake: Omitting a deadline by which the company must exercise the repurchase right. Without a defined window, the right may be considered an indefinite encumbrance on the shares, complicating future transfers and investor due diligence.

In plain language: Prohibits the purchaser from selling, transferring, pledging, or otherwise disposing of any shares — vested or unvested — without prior written company consent until the restrictions lapse or an approved liquidity event occurs.

Common mistake: Not defining 'Permitted Transfers' to cover estate planning transfers to revocable trusts or family members. Without this carve-out, founders cannot move shares into trusts for estate planning without triggering a technical breach.

In plain language: Requires the purchaser to offer the company (and sometimes existing shareholders) the right to buy any shares they propose to sell to a third party, on the same terms as the proposed sale, before completing the transfer.

Common mistake: Drafting the ROFR without a matching right for existing shareholders (pro-rata participation). Investors who join in a later round often expect ROFR rights to cascade — omitting them can require amendment at a funding close.

In plain language: Describes the circumstances — change of control, termination without cause, or both — that trigger early vesting of some or all unvested shares, and the percentage that accelerates under each scenario.

Common mistake: Using single-trigger acceleration without investor alignment. Acquirers frequently require key founders to continue post-acquisition; single-trigger full acceleration eliminates their retention incentive and can reduce acquisition valuations or kill deals.

In plain language: The purchaser confirms they are acquiring shares for investment, not for resale; they understand the restrictions on transfer; they are an accredited investor if required; and they have reviewed the company's capitalization table.

Common mistake: Omitting accredited investor representations when the purchaser is not a company founder or full-time employee. Issuing shares to an advisor who does not qualify as an accredited investor without proper exemption analysis can trigger securities law violations.

In plain language: Notifies the purchaser of the US tax consequences of receiving restricted stock, explains the Section 83(b) election and its 30-day filing deadline, and confirms the purchaser's responsibility to consult their own tax advisor.

Common mistake: Attaching an 83(b) form but failing to confirm in writing that the election was actually filed. If a founder misses the 30-day window, the tax consequences can be severe — the company should track and confirm receipt of the IRS acknowledgment.

In plain language: Requires the company to place a securities-law legend on the stock certificate (or electronic book entry) and authorizes the transfer agent to reject any transfer that would violate the agreement or applicable securities laws.

Common mistake: Issuing shares with no legend or book-entry notation in a cap-table management platform. Without a notation, subsequent transfers may proceed without triggering the repurchase right or ROFR, defeating the purpose of the agreement.

In plain language: Specifies which state's law governs the agreement, confirms that this document is the entire agreement between the parties on the subject matter, and requires any amendments to be in writing and signed by both parties.

Common mistake: Choosing the founder's home state as governing law instead of Delaware (or the state of incorporation). Most startup investors and acquirers expect Delaware corporate law to govern equity documents — a different governing-law clause can require amendment before a funding close.

A restricted stock purchase agreement (RSPA) is a contract under which a company sells shares to a founder, employee, or advisor at a stated price, subject to a vesting schedule and a company repurchase right over unvested shares. Unlike stock options, which grant the right to buy shares in the future, restricted stock transfers actual ownership immediately — but the company can claw back unvested shares if the recipient leaves before vesting is complete. RSPAs are most commonly used at startup formation to align founder incentives with long-term company building.

Restricted stock is issued today at the current (usually near-zero) FMV; the recipient owns the shares immediately and can file an 83(b) election to lock in a low tax basis. Stock options grant the right to purchase shares in the future at a fixed exercise price set at today's FMV — the recipient pays nothing now but owes income or AMT tax when the options vest or are exercised, depending on whether they are ISOs or NSOs. Restricted stock is generally preferred by founders at incorporation; options are the standard instrument for employees hired after the company has meaningful value.

Without an 83(b) election, the IRS treats each vesting event as a taxable compensation event — the founder owes ordinary income tax on the FMV of the shares on each vesting date. If the company's value has grown significantly, this creates a large tax liability on shares the founder cannot yet sell. An 83(b) election, filed within 30 days of the grant, moves all income recognition to the grant date — when shares are typically issued at or near par value, meaning the taxable income is negligible. The 30-day deadline is statutory and absolute; there are no exceptions.

The investor-standard for founder vesting is a 4-year total period with a 1-year cliff and monthly vesting thereafter. Under this structure, 25% of shares vest at the 12-month mark, and the remaining 75% vest in equal monthly installments over the next 36 months. Investors expect this structure because it aligns founder incentives with the typical 4–7 year company-building horizon and ensures that a departing co-founder cannot retain a large unvested equity stake that dilutes the team and future hires.

The company's repurchase right allows it to buy back unvested shares at the lower of the original purchase price or current FMV — typically at or near par value for early-stage companies. The company generally has 60 to 90 days from the termination date to exercise this right. Vested shares are the founder's property; the company cannot repurchase them without the founder's consent unless a separate drag-along or forced-sale provision applies. If the company fails to exercise the repurchase right within the window, the unvested shares typically convert to fully vested shares by default.

For standard founder grants at incorporation, a high-quality template reviewed by a startup attorney is typically sufficient and costs $300–$600 for a review. More complex situations — executive grants at a late-stage company, grants involving non-US jurisdictions, or grants tied to acquisition earnouts — warrant custom drafting. Given that a missed 83(b) deadline or a poorly drafted repurchase right can cost a founder far more than a legal review, consulting an attorney before the first grant is generally worthwhile.

Double-trigger acceleration vests unvested shares only if two events both occur: a change of control (merger, acquisition, or asset sale) AND a qualifying termination — typically termination without cause or resignation for good reason — within a defined period after the change of control (usually 12 months). Investors and acquirers strongly prefer double-trigger because it preserves post-acquisition retention incentives. Single-trigger acceleration, which vests shares on a change of control alone, is typically reserved for founders who will not have a role in the acquiring company.

Yes, but the terms typically differ from founder grants. Advisor RSPAs usually cover a smaller share count (commonly 0.1–0.5% of fully diluted shares), a shorter vesting period (12–24 months), and a higher per-share purchase price reflecting FMV at the time of grant. Because advisor grants are often made after the company has raised capital, the FMV is higher and the 83(b) election is less clearly beneficial — the advisor should consult a tax professional before filing. Securities law exemptions (Regulation D accredited investor requirements) also apply.

In the US, the key considerations are federal securities law (Regulation D exemption) and state blue sky laws for each state where a purchaser resides. Canada has no equivalent to the 83(b) election — restricted share grants are taxed under the employment income rules of the Income Tax Act at vesting. UK EMI scheme shares and unapproved restricted shares have distinct HMRC reporting requirements. EU member states handle restricted equity compensation under local income tax and social security rules that vary significantly by country.